Where Are the Shareholders’ Mansions? CEOs’ Home Purchases, Stock Sales, and Subsequent Company Performance

  • Crocker Liu
  • David YermackEmail author


We study real estate purchases by major company CEOs, compiling a database of the principal residences of nearly every top executive in the Standard and Poor’s 500 index. When a CEO buys real estate, future company performance is inversely related to the CEO’s liquidation of company shares and options for financing the transaction. We also find that, regardless of the source of finance, future company performance deteriorates when CEOs acquire extremely large or costly mansions and estates. We therefore interpret large home acquisitions as signals of CEO entrenchment. Our research also provides useful insights for calibrating utility based models of executive compensation and for understanding patterns of Veblenian conspicuous consumption.


Real Estate Stock Return Earning Announcement Conspicuous Consumption Stock Performance 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.



For helpful comments we wish to thank J. Carr Bettis, Stuart Gillan, William Rabel, and seminar participants at the University of Alabama, Boston College, Center for Financial Studies (Frankfurt), Erasmus University (Rotterdam), European School of Management and Technology (Berlin), Federal Reserve Bank of New York, University of Georgia, London Business School Corporate Governance Conference, University of Lugano, Mannheim University, New Economic School (Moscow), Texas Tech University, and Tilburg University. We appreciate research assistance by Michael Gershman and Michael Mahoney. For the paper’s title, we acknowledge Fred Schwed Jr., Where Are the Customers’ Yachts? Or, A Good Hard Look at Wall Street (1940).


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Copyright information

© Springer-Verlag Berlin Heidelberg 2012

Authors and Affiliations

  1. 1.Cornell UniversityIthacaUSA
  2. 2.Stern School of BusinessNew York UniversityNey YorkUSA

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